Chapter 04 Recognizing a Firm’s Intellectual Assets: Moving beyond a Firm’s
Tangible Resources Answer Key
True / False Questions
1.
According to the text, for most of the 20th century, managerial efforts were directed more toward the
efficient allocation of labor and capital.
2.
The importance of human capital has decreased in recent years. For this reason, many firms have placed
greater attention on attracting talent, but not on developing or retaining it.
3.
The more reliance a firm has on intellectual capital, the closer its book value will be to its market value.
4.
The difference between the market value and book value of a firm is its social capital.
5.
In the current economy, reliance on the three traditional financial statements (income statement, balance
sheet, and statement of cash flow) has increased.
6.
Firms such as Apple and Microsoft will tend to have a higher ratio of market value to book value than
industrial companies such as Nucor Steel.
7.
Creation of new knowledge involves the continual interaction of explicit and tacit knowledge.
Level of Difficulty: 2 Medium
Topic: The Central Role of Knowledge in Today’s Economy
8.
Social capital does not extend beyond the organizational boundaries to include relationships between the
firm and its suppliers, customers, and alliance partners.
9.
Explicit knowledge is in the mind of employees and is based upon their experiences and backgrounds.
10.
The gap between company market value and book value is far greater for knowledge-intensive
corporations than for firms with strategies based primarily on intangible assets.
11.
In firms where knowledge and the management of knowledge workers are relatively important
contributors to developing products, and services and physical resources are less critical, the ratio of
market-to-book value tends to be much lower.
12.
Firms in more traditional industry sectors such as Nucor and General Motors have relatively low
market-to-book ratios. This reflects their greater investment in knowledge resources and lower
investment in physical resources.
13.
A firm like Intel has a market–to-book value ratio that falls between Apple-Microsoft and Nucor-
General Motors. This is because its low level of investment in knowledge resources is matched by a
correspondingly huge investment in plant and equipment.
14.
Knowledge workers are more loyal to their companies than traditional workers.
15.
Technical skills are a necessary and sufficient condition for hiring an employee.
16.
One of the most important elements in a good employee is his or her attitude. Firms should follow the
adage: hire for attitude, train for skill.
17.
Companies have found that referrals from their own employees are generally an effective approach to
recruiting top talent.
18.
The Millennial generation expects employers to provide incentives to attract and retain them. A
company that does this will have a competitive advantage.
19.
Millennials value hard work and will rarely use vacation time.
20.
In most effective evaluation and reward systems employees only receive evaluation and feedback from
their immediate supervisor.
21.
The 360-degree evaluation and feedback system addresses many of the limitations of traditional
approaches to evaluating human capital.
22.
The 360-degree evaluation systems are not useful due to the need to integrate large amounts of
feedback.
23.
The most effective method of improving retention of top talent at a firm is to intensify its hiring efforts.
24.
An internal work opportunity market for employees is one means of increasing employee retention.
25.
The text suggests that talented professionals are typically most concerned about financial rewards.
Money is the top reason why such employees take and leave jobs.
26.
Workforces that reflect demographic changes will become more homogeneous over the next few
decades with regard to gender, race, ethnicity, and nationality.
27.
Social capital is found in the knowledge, skills, and abilities of individual employees.
28.
Developing social capital is risky for an organization because social capital is specific to individuals and
remains with the employee, if he or she leaves the organization.
29.
The development of intellectual capital (that is, the friendships and working relationships among
talented individuals) gains importance, because it helps tie knowledge workers to a given firm.
30.
In this case, the scientist is offered approximately the same salary, facilities, and equipment plus one
A hiring agent offers a scientist approximately the same salary, facilities, equipment, and shared
laboratory with 10 highly skilled and enthusiastic scientists. Part of the job is to collaborate with these
peers and jointly develop promising drug compounds. This structure will create greater firm loyalty than
one in which the hiring agent offers only monetary compensation.
31.
Knowledge-based resources tend to be more explicit in nature.
32.
If employees are working effectively in teams and sharing their knowledge and learning from each
other, not only will they be less likely to add value to the firm, but they also will be more likely to leave
the organization, because of the loyalties and social ties that they develop over time.
33.
Hiring via personal networks is a trend in which job recruiters look for candidates at the crux of social
relationships in organizations because they have the potential to bring valuable colleagues with them.
34.
Human capital mobility caused by social relationships occurs when talent emigrates from an
organization to form start-up ventures.
35.
When Michael Reene left Andersen Consulting, eventually he joined Third Millennium as CEO with a
small salary and 20 percent ownership position. He brought others with him, who brought others with
them. This was possible because of the Pied Piper effect.
36.
Start-up ventures often are formed by mobile human capital talent.
37.
Unique bundles of resources can contribute to employee competitive advantages.
38.
Hiring organizations can be amorphous, distant and threatening entities and therefore detractors for
knowledge workers.
Mr. Reene was a star at Andersen Consulting in the 1980s and at IBM in the 1990s. He built his
businesses and kept turning down overtures from Mr. Eickhoff. However, in early 2000, he joined Third
39.
Social capital helps organizations leverage human capital within and across the firm.
40.
Social network analysis can be used to help identify groups or clusters of individuals that comprise the
network, individuals who link the clusters, and other network members.
41.
Developing and protecting social capital requires independence, in which individuals must spend most
of their time working individually.
42.
In bridging relationships in social networks, one member is central to the communication flows in a
group.
43.
Closure, in contrast to bridging relationships, stresses the importance of ties connecting heterogeneous
people.
44.
From the individual perspective, social networks deliver three unique advantages: private information,
access to diverse skill sets, and power.
45.
One potential downside of building social capital in an organization is groupthink. This means everyone
in the group thinks on his or her own and comes up with new ideas.
46.
The role of technology in the recruitment of human capital has lowered individual reliance on the use of
social networks.
47.
Connectors are people to have a unique ability to link people, ideas and resources and are rarely useful
for business because they maintain only personal connections that are not transferable.
48.
John wanted to set up a nurse-led preoperative assessment service intended to free up time for the
doctors who previously led the assessments, reduce cancelled operations (and costs), and improve
patient care. Carol, a well-respected nurse, had less seniority than John, but many colleagues relied on
her advice about navigating hospital politics. She knew many of the people whose support John needed
and she eventually converted them to the change. This is an example of a connector.
49.
Social networks such as Facebook do not facilitate increased interactions between members in a social
network via Internet-based communications.
50.
In social network analysis, a person who has no linkages to others in the network is labeled a
conformist.
51.
Burt studied several hundred managers in the Raytheon supply chain group and asked them to write
down ideas to improve the company supply chain management. Then he asked two Raytheon executives
to rate the ideas. The conclusion: The best suggestions consistently came from managers who discussed
ideas outside their regular work group. This is an example of a structural hole.
52.
Effective collaboration requires overcoming four barriers: the not-invented-here barrier, the hoarding
barrier, the search barrier, and the place-setter barrier.
53.
The use of email can be distracting to employees. Some firms limit the time that employees spend using
email.
54.
Sharing knowledge and information throughout the organization is important for conserving resources,
developing products and services, and thwarting new opportunity creation.
55.
Technology can be used successfully to leverage human capital and knowledge within organizations as
well as with customers and suppliers beyond their boundaries.
56.
Email can cause embarrassment, as explained by Marshall Goldsmith, executive coach.
57.
Deliberate actions to reduce email output consist of forwarding all messages, but limiting the number of
recipients.
58.
Phone calls can be better than emails for providing real-time feedback on whether a message is being
understood.
59.
Facial expressions and body language make in-person meetings a rich method of communication, but
not significantly better than email in most cases.
60.
Top executives should use email for monthly blasts to employees to discuss company health and other
specific issues.
61.
Technology can also enable much more sophisticated forms of communication in addition to knowledge
sharing.
62.
Cisco launched Integrated Workforce Experience (IWE) in 2010. It is a social business platform
designed to facilitate internal and external collaboration and decentralize decision making. It functions
much like a Facebook wall in that a real-time news feed provides updates on employee status and
activities as well as information about relevant communities, business projects, and customer and
partner interactions. This is a reason to totally eliminate email.
63.
The use of communication platforms such as the Cisco Integrated Workforce Experience (IWE) permits
companies to push out information where it is needed.
64.
Technology can be used to leverage human capital and knowledge within organizations as well as with
customers and suppliers beyond their boundaries.
65.
One should only rely on communication platforms and never on email for communicating information.
66.
Since electronic teams (e-teams) seldom meet face-to-face, it is not important for them to be concerned
with how to combine individual contributions effectively.
67.
Once a knowledge asset (e.g., a software code) is developed and paid for, it can be used many times at
very low cost as long as it does not have to be substantially modified each time.
68.
According to the text, effective e-teams identify group members with a proper balance of technical and
interpersonal skills.